During the height of the debate around the 50p tax last year, I said numerous times I wished the Conservatives would just cut it so it would blow up in their faces. They duly did and it inevitably did.

What amused me was the look of horror on the faces of right-wing commentators. Before the budget, their newspapers stridently argued for a cut and even ran embarrassingly thin stories to keep up the pressure. But after the budget they all agreed it had been a political disaster for Osborne and promptly slammed him.

This entertaining spectacle is now set to be repeated with the Beecroft report.
Yesterday the Sunday Telegraph reported:

David Cameron is to back a radical plan to rip up employment red tape to help deliver growth. He will throw his weight behind a far-reaching report which calls for a bonfire of regulations that employers say are stifling job creation.

The idea that red tape is stifling growth and holding back job creation is utterly ludicrous.

Imagine a middle or low income family struggling to make ends meet. Does anyone seriously think taking away job security would encourage them to spend money? More importantly, would such a move encourage them to embrace the Conservative? I doubt that even more.

I said a few weeks ago, when Liam Fox floated similar ideas, that Libdems will look and think: ‘these fuckers never learn, do they?‘

In fact he should embrace the even more barmy Taxpayers Alliance report to really shoot himself in the face.

Right-wing commentators will then turn around again and ask, ‘what was Cameron thinking in embracing this barmy report?‘ without any sense of irony. I’ll just grab the popcorn again and chuckle to myself.

This attitude of right-wing commentators, whereby they push the government to do mad, counter-productive things, and then act horrified when they do so, is most entertaining. The only problem is that the rest of us are paying for this folly.

Reader comments

I’m opposed to various things which are (I think) being proposed at the moment – flat rate tax, making it easier to dismiss workers etc – BUT my husband has a small business and he used to employ a few people but now he says he’ll never employ anyone again because the bureaucracy and red tape was such a nightmare.

Tory MPs spend a lot of time meeting local business people and employers in their constituencies. It’s fairly common to hear them claiming that local businesses would hire more and expand were it not for various restrictive employment practices.

Labour MPs spend a lot of time meeting local business people and employers in their constituencies. It’s fairly common to hear them claiming that local businesses have no real problems with existing levels of employment legislation.

They both can’t be right.

Let’s see the Beecroft Report when its published and see what EVIDENCE Beecroft provides for suggesting that ripping up employment red tape would boost growth.

My anecdotal evidence of small businesses is that employment legislation is a minor irritant (everyone has one horror story of an employee trying it on with unfounded harrassment claims and spending hours in court) but nothing like the red tape involved in any planning or building issue.

Set up a restaurant. Hiring people is easy. Getting planning permission for air con ducts takes months and costs thousands.

I think you’ve made the mistake of believing hype in the Telegraph. Cameron isn’t cutting red tape – the far reaching proposals merely mean…er… just 20 and of those he’s just tinkering around the edges in order to bring them closer in line with EU law.

Employment law is an EU competence, so any claims of cutting back on this is always going to be nonsense on stilts.

I don’t disagree with you that the UK is in the premier division of ease of doing business.

However these things can change quite quickly as my point that the UK scored No 1 for “ease of obtaining credit” (I suspect based on 3 year old data) showed.

But the mere fact that these “ease of doing business” tables exist just demonstrates that Sunny is wrong to claim the idea that red tape stifles business is “ludicrous”. If it didn’t stifle business then why have the tables.

It is perfectly clear that red tape MIGHT stifle job creation. So let’s look at the evidence in the UK currently and see if Beecroft has anything sensible (and evidenced) to suggest.

And if he doesn’t, then it’s not much money wasted, and we can all move on.

In health for example, “A hospital trust is planning to extend a scheme under which dozens of unpaid jobseekers help deliver patient care in its wards. After a pilot involving six unemployed people working unpaid for eight weeks to help feed patients and clean wards, Sandwell and West Birmingham hospitals trust said it was aiming to extend the government work experience programme to all three of its hospitals”.http://www.guardian.co.uk/society/2012/may/21/unpaid-jobseekers-deliver-patient-care

If the scheme is a success there is a whisper that unemployed tradesman may be upskilled to undertake minor surgical procedures?

I’m opposed to various things which are (I think) being proposed at the moment – flat rate tax, making it easier to dismiss workers etc – BUT my husband has a small business and he used to employ a few people but now he says he’ll never employ anyone again because the bureaucracy and red tape was such a nightmare.

Lucky you!, I also ran a small sized company and had no choice but to employ between 50 to 100 people, I could not do it all myself and to be honest you employed them, I had an agency which did the wages and the tax, they took on most of the red tape, the health and safety I believed was right and kept on top of it.

Some people in business cannot just say ah well I’ll do it myself, but in the end we use to sub contract the work out

The right also continues to change sides on the higher rate of tax. 1 minute we are told that the higher rate tax does not bring in much in the first place. Then they tell us cutting this tax will be huge for the economy because this mountain of money (that isn’t very big remember) will stimulate growth. Cameron boasted that cutting the rate from 50p to 45p will bring in double the amount of cash for the revenue. In that case why not cut it to 40p These people just lie and lie and lie.

As for making employment laws much weaker this is the global elites determination to return us to 19th century. All those people who said we had to destroy the Trade unions because they had too much power and that capital would be responsible are liars. The banking crises has shown that capital is not responsible. I do hope all those middle class employees who vote tory enjoy longer working hours, more stress, and less time with their families. Because that is what is coming.

Interesting to see where Clegg and his idiot Lie Dem politicians will be on this. Silly Sally , they will do what Cameron says..

” 1 minute we are told that the higher rate tax does not bring in much in the first place.”

Correct. Discounting the fact that self-employed people can juggle when they pay tax (like Ken L) for a year or two, it brings in a bit more in early years but revenues fall in later years as self-employed work less hard and others move to other countries and others don’t come here in first place.

“Then they tell us cutting this tax will be huge for the economy because this mountain of money (that isn’t very big remember) will stimulate growth.”

This is where you are confused. No one has said anything about a mountain of money stimulating growth.

The stimulus comes from those who have the choice of whether to expand their businesses in the UK or move overseas deciding to expand in the UK.

The 50p tax rate doesn’t make much difference to how hard most professionals (lawyers, bankers, accountants etc) on a 250k income work.

It does make a huge difference to global businessmen who earn in the millions and employ 100s.

You need an awful lot of 250k accountants stuck in Sevenoaks paying 50p tax to compensate for one businesswoman making £10m pa who decides to move to Hong Kong or Dubai.

“In that case why not cut it to 40p”

Because it is a delicate balance between charging a high enough tax rate to raise tax revenues without charging so much it is counter productive.

Economists study this stuff with plenty of actual data and tend to agree that for an open economy like the UK the maximum rate to charge is in the low 40s.

“These people just lie and lie and lie.”

Not in this particular case. You are just confused about the arguments, or just deliberately mis-representing the arguments.

Sarah AB: “my husband has a small business and he used to employ a few people but now he says he’ll never employ anyone again because the bureaucracy and red tape was such a nightmare.”

…and that’s exactly the inevitable frustration right wing think tanks want to tap into. Employing people is always going to involve time-consuming and irritating admin, unless you want to abolish employer involvement in income taxes and pensions.

Of course, solving those problems isn’t something they’re remotely interested in, but they’ll happily take the annoyance and channel it at their goals of forcing down the average wage, cutting tax for the rich and passing fire-at-will legislation.

Even if their economics worked – which they don’t – a world where workers everywhere are paid rock-bottom wages and are motivated to work primarily by fear of being sacked is not one I want to live in.

Shinsei1967: “The stimulus comes from those who have the choice of whether to expand their businesses in the UK or move overseas deciding to expand in the UK.”

But if everyone follows your advice, all the other countries will be doing this too – and there will be no stimulus, because the relative position will be unchanged and – according to your own logic – they’ll move anyway (but pay less tax when they get there). You’re advocating a race to the bottom, which we can’t all win, any more than all the football teams could win the Premier League at once if they just tried harder.

Shinsei1967: “You need an awful lot of 250k accountants stuck in Sevenoaks paying 50p tax to compensate for one businesswoman making £10m pa who decides to move to Hong Kong or Dubai.”

Ideally they wouldn’t be personally paid £10m in the first place. That salary is making goods and services more expensive for normal people, and while it may be invested in productive activities, it’s just as likely to be invested in inflating a property bubble somewhere or in an asset-stripping hedge fund.

Libertarians seem to see such salaries as scandalous inefficient waste when they come out of taxation. For some reason when they come out of the price of groceries, insurance or interest on your bank account they’re laudable evidence of personal excellence and national prosperity.

I’d sit back and watch on with popcorn in hand – but they are screwing up the country I live in and (as out-dated as this sounds) love.

Truth is – the UK has one of the lightest touch employement regulation regimes in the developed world – and one of the most competitive tax regimes in the developed world.

As such the marginal benefits of improving these things – and that’s even assuming despite the evidence of the last two years that this government is competent enough to improve something when they change it – would be tiny.

Infrastructure and education on the other hand – areas that the UK lags behind the western world on – could be invested in and offer much greater marginal benefits to our nation’s economic competitiveness.

Sadly the government doesn’t really care. They are not a party for business. They are a party for rich businessmen. And that’s a very different thing.

“Infrastructure and education on the other hand – areas that the UK lags behind the western world on – could be invested in and offer much greater marginal benefits to our nation’s economic competitiveness.”

A rather depressingly defeatist attitude. In what way are we lagging ?

The UK has the best universities in the world, after the USA. We far out rank the rest of Europe in tertiary education.

Our secondary schools are pretty good by international standards, and our private secondary schools are by far the best in the world.

Infrastructure ? Certainly room for improvement, but I think you have rose-tinted glasses about other countries. Have you seen Japanese schools ? Or regional French airports ? Or Italian housing ?

“Sadly the government doesn’t really care. They are not a party for business. They are a party for rich businessmen. And that’s a very different thing.”

In what way do you think businessmen don’t want large infrastructure contracts (whether funded by government or privately) ?

I don’t disagree that the danger is that there would be a race to the bottom. But how would you stop this unless you forced all countries to have the same tax rate or prevented people from working overseas.

However, it isn’t as bad as you suggest. There is more to life than paying as little tax as possible. That’s why many thousands choose to work in London and pay high taxes rather than live in Singapore and pay half the tax. Because London is a “better” place to live for most.

And similarly why no one chooses to work in Somalia. Despite Somalia having no tax system at all.

Also bear in mind I wasn’t advocating the UK having lower upper rate tax rates than most of our peers. Merely stating that 50p was significantly higher than the rich pay in Germany or France. That can’t be sensible for a country like the UK (especially London) that attracts so many highly paid foreigners.

Of course its true I read it in the papers, emplyee rights cause unemployment.
That’s why countries like Germany have higher unemployment and a weaker economy than us ….. oh hang on erm,,,,,

Our problems are caused by employer NOT investing in employees. The race to the bottom, competing on price rather than skills.
What we need is better trained employees who feel secure in their employment. We need investment from the employers on infastructure, wages, training etc. What we get is lower wages, less rights, while more money is taken out of the companues through Dividends and Board room pay.

The British Economic model brought in by the Tories in the 1980s (and yes kept going by New Labour) is bust, more of the same won’t work. We need a new settlement an new way of working.